Mortgages for the Self-Employed
Are you self-employed? And are you looking to purchase a new home? This seemingly straightforward set of circumstances can in fact create a significant challenge to securing a residential mortgage.
Although self-employment can offer several advantages and benefits, both personal and financial, one of its disadvantages is the access to credit. Many lenders/institutions consider self-employed individuals to be a higher risk situation than salaried employees because those who work for themselves may have a less stable income. As a result, there are stricter criteria for approval of a self employment mortgage.
At Mortgage Intelligence, Natasha Bridgmohan and her team of experienced brokers deliver a comprehensive mortgage service. We follow a step-by-step consultative approach to help you obtain the mortgage that addresses your specific needs. We work with self-employed individuals every day and we fully understand the issues and challenges inherent in applying for self employment mortgages.
What information do you need for your application?
When applying for self employment mortgages, lenders may require any or all of the following:
- Proof that you have been self-employed for three years – your business license, HST number, or articles of incorporation
- Confirmation of the amount you have available for your down-payment – how much money you will be putting down on the purchase of your home
- The last two to three years of your T1 General tax returns and Notices of Assessment – to show your reported income and any income tax outstanding
- Client contracts and/or work orders – to indicate your major or primary sources of income
- Financial statements – to reflect the steady flow of cash into your business
- Your credit history – to demonstrate your ability to repay debt based on your track record
What factors might affect your application?
- Any previous bankruptcies or foreclosures
- Poor credit history – including late payments on credit cards or other loans
- Active use of many different credit cards – from various banks, major retail/restaurant chains
- Guaranteeing or co-signing a loan or mortgage for another person or party
- Inconsistency or instability in terms of your field of business and your residential history
Tip: Paying down debt can significantly improve your chances of securing a self employment mortgage. Consider using any cash/liquid assets that you may be holding in reserve in a financial institution.
For more information about applying for self employment mortgages, contact the mortgage experts at Mortgage Intelligence. Contact Natasha and her team of Toronto mortgage brokers today at 1-866-553-7467 ext 221 or 905-851-8871 ext 221. You can also complete our online mortgage application form.